8/12/13

NY Times Article on Implant Costs

​A recent New York Times article had some very interesting insight into healthcare tourism and the high costs associated with the US healthcare system, particularly implant costs. The article spotlights a man in America who receives a quote for a hip replacement. The implant costs $350 to manufacture in the US and $150 overseas. He negotiated the wholesale rate of $13,000 for the implant ( it would have been much higher had the hospital billed their retail rate). The hospital then wanted to charge another $65,000 for the room, with surgeon and anesthesia charges still extra. If all of these charges had occurred, the total surgery cost would have been more than $100,000.So the patient opted to get his hip replacement in Europe for $13,660. That price included the implant, all surgeon fees, operating room charges, crutches, medicine, a five-day hospital stay, a week in rehab and a round-trip ticket.While there were many takeaways in this article, one was not explored. The article mentions five companies controlling the implant market but doesn't go into why there's such a lack of competition. Anyone in healthcare cost containment can tell you that the implant cost spike is one of the main drivers of the industry cost increase. In any free market, a product that's pretty easy to manufacture, with such a large profit margin, would have a lot of competition and the price would have to decrease due to the competition. There can be only one reason manufacturers haven't aggressively hit this market. Regulations must be creating barriers to entry. Obviously, other manufacturers can't gain approval to sell their competing implant parts. This article points to a hole in the system; and a mindset change that will be needed to solve healthcare. We are trying now. Every day Rising is doing our best to imitate free market price controls on the back-end of the healthcare process with our medical bills review products. The more exciting part will be on the front-end. We are actively working on products to create a more market-driven model. While the healthcare system needs to evolve to be sustainable, there is work that's being done today to move us the right direction.